CEF of the Month....

[xray]

FSK News

Reuters
EMBARGOED-FS Investments taps ex SkyBridge co-CIO Gayeski as chief market strategist
By Svea Herbst-Bayliss
Tue, October 19, 2021, 6:00 AM

FSK
+0.31%

Oct 19 (Reuters) - FS Investments, an alternative asset manager that invests roughly $25 billion, said it has hired Troy Gayeski, the former co-chief investment officer at Anthony Scaramucci's SkyBridge Capital, as its chief market strategist.

Gayeski joins FS Investments as low interest rates force investors to search for new ways to make money in their fixed income portfolios, prompting moves into private credit and real estate investments, for example.

At FS Investments, Gayeski will work with chief investment officer Mike Kelly, Robert Hoffman, who heads research, and chief U.S. economist Lara Rhame. His position is a new one.

The firm, founded as Franklin Square Capital Partners in 2007, concentrates on giving retail investors access to alternatives including business development companies (BDCs) that loan money to smaller companies at a time other lenders pulled back from making these types of loans.

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Live Long and Prosper....

[xray]

FSK News:
Zacks
FS KKR Capital (FSK) Q3 Earnings Preview: What's in the Cards?
Zacks Equity Research
Mon, November 1, 2021, 3:01 PM

FSK
-1.78%

The market expects FS KKR Capital (FSK) to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended September 2021. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on November 8. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus Estimate

This business development company is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $335.72 million, up 128.4% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings Whisper

Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for FS KKR Capital?

For FS KKR Capital, the Most Accurate Estimate is the same as the Zacks Consensus Estimate, suggesting that there are no recent analyst views which differ from what have been considered to derive the consensus estimate. This has resulted in an Earnings ESP of 0%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that FS KKR Capital will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that FS KKR Capital would post earnings of $0.61 per share when it actually produced earnings of $0.74, delivering a surprise of +21.31%. Over the last four quarters, the company has beaten consensus EPS estimates four times.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. FS KKR Capital doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

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Comment: FSK maintains a 10star rating currently with a Report card grade of 100 [Power level 100] with a current dividend of 11.84% [COB Friday]. FSK closed down -$0.39 from COB Friday's numb3rs....
Disclosure: Some of us continue to maintain a [High Risk] Phase #4 position in FSK [with a Rf (risk assessment) of +0.843 ... need >+.416]....

Live Long and Prosper....

[xray]

FS KKR Capital Corp. FSK is slated to announce quarterly results on Nov 8....

Live Long and Prosper....

[richardsok]

This may be old news to some of you, but I was just poking around earnings reports last night and came across the Sept Pimco CEF report. From What I see, PDO was far and away outperforming the other CEFs. It is the only taxable fund with significant UNII for YTD 2021 : .43. It also had 3-month coverage of 151% and 6-month coverage at 134%.

The only other out-earning taxable Pimco contenders were PGP with .14 UNII and PCM with .10.

Granted this is simplistic, and it doesn't address the question if various funds are sitting on large unrealized gains, but (to read the tea leaves) I would conclude (A) PDO might be a good place to park some cash for the next few months. It's out-earning, has recently fallen in price and appears to be at support. (B) PDO could be a potential candidate for an EOY special distribution (C) But the good numbers would seem to make PDO's price drop a few weeks back a mystery. I would guess PDO competes with other higher-yielding CEFs and I would further guess its current 6.8% distributions make it (at first glance) relatively unattractive to small investor yield-junkies. I surmise that may be why PDO fell in price a while back and hasn't recovered. BUT -- if it raises its distribution or announces a special, the price could spike.

Well, that's enough guessing. On Monday I will talk to my broker to see if Merrill Lynch has any recent research reports on PDO. If so, I will summarize the highlights here. But, barring any jarring revelations, I'm thinking of taking a position.

[uncleharley]

A 10% or so correction does not seem to be unusual to me, especially after a spike in price.  The amount of leverage they are using on junk bonds does make me pause.

[richardsok]

To follow up on PDO, Merrill Lynch has no current ranking, but TipRanks scores it 10 out of 10. Bought a block in the IRA. Ex-div coming soon.

[steelpony10]

richardsok ,

         PDO is “managed” the others are not. So a different cat when making comparisons. Correct me on this but I think it’s their first one. They have to hold back some of their income to preserve the distribution during leaner times.

         Since it’s brand new this year there really is no record. Your money is in the best hands though managing a CEF of worldwide lower rated bonds. I saw PIMCO is bringing in some new talent to get their feet wet assisting the vet Murata. Ivascyn also in the mix. These are the two main managers.

[rhythmmethod]

richardsok, steelpony10, interesting discussion. R. obviously voted with his book. I was a toss up with the final reasoning (likely faulty) that the new PDI would have some of the strength of its established new components. There might be drama to lower everything thus a buying opportunity to add for a long term hold, collecting yield in the meantime. PDO sure seems to have momentum and newbi mojo. I could be convinced to exchange my small entry level position. Thoughts?

[Deleted]

seekingalpha.com/article/4462277-pimco-pdo-cef-strong-income-metrics-some-risks-to-consider

seekingalpha.com/article/4457581-pdo-we-are-buying-the-dip-for-this-6-9-percent-yield

seekingalpha.com/article/4455344-pimco-august-update-we-see-the-initial-cuts-pdo

seekingalpha.com/article/4436936-pdo-clearing-up-some-misconceptions

and, of course, from "Dick Cod":
FWIW....Using the recent UNII stats plus distributions so far (annualized) divided by current NAV, it appears PDO is generating a NII yield on NAV of about 8.45%
Regards, Dick
Oct 19, 2021. 01:20 PM

edit:

and note that its NAV has perked up in the past few days
quotes.morningstar.com/chart/cef/chart.action?t=pdo&region=usa&culture=en-US

richardsok  .... as to your mention of possible large unrealized gains, from "Dick Cod":
Hi Nick. Both the monthly PIMCO UNII reports and the GAAP financials you display above certainly suggest ongoing NII coverage weakness in many PIMCO CEFs. However, many of us have made two observations that are not exactly at odds with that data, but at least dissonant:

1. The 19a's issued by the funds disclose little or no failure to cover.

2. The GAAP financials reveal HUGE unrealized gains AND PREMIUMS PAID in the interest rate swap books of many PIMCO CEFs.....as in way over a dollar a share in PFN PFL PHK PTY.....all of which is a ready source of cash/NII available to cover distributions.

Can you shed any light?

Regards, Dick

Oct 20, 2021. 06:20

--- Frank

[xray]

FDK Qtrly:
Zacks
FS KKR Capital (FSK) Tops Q3 Earnings and Revenue Estimates
Zacks Equity Research
Mon, November 8, 2021, 7:45 PM

FSK
-0.09%

FS KKR Capital (FSK) came out with quarterly earnings of $0.64 per share, beating the Zacks Consensus Estimate of $0.63 per share. This compares to earnings of $0.63 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 1.59%. A quarter ago, it was expected that this business development company would post earnings of $0.61 per share when it actually produced earnings of $0.74, delivering a surprise of 21.31%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

FS KKR Capital, which belongs to the Zacks Financial - SBIC & Commercial Industry industry, posted revenues of $360 million for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 7.23%. This compares to year-ago revenues of $147 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. FS KKR Capital shares have added about 31% since the beginning of the year versus the S&P 500's gain of 25.1%.

What's Next for FS KKR Capital?

While FS KKR Capital has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for FS KKR Capital was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.62 on $340.48 million in revenues for the coming quarter and $2.58 on $1.03 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial - SBIC & Commercial Industry is currently in the top 40% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

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Live Long and Prosper....

[xray]

Additional Information:
FSK
PR Newswire
FS KKR Capital Corp. Announces September 30, 2021 Financial Results and Declares Fourth Quarter 2021 Dividend of $0.62 Per Share
Mon, November 8, 2021, 4:15 PM

FSK
-0.09%

PHILADELPHIA and NEW YORK, Nov. 8, 2021 /PRNewswire/ -- FS KKR Capital Corp. (NYSE: FSK), today reported net investment income of $201 million, or $0.71 per share for the third quarter ended September 30, 2021. The Company's net asset value ("NAV") was $27.14 per share as of September 30, 2021, compared to $26.84 per share as of June 30, 2021.

Financial and Operating Highlights for the Quarter Ended September 30, 2021(1)
Net investment income of $0.71 per share, compared to $0.77 per share for the quarter ended June 30, 2021
Net asset value of $27.14 per share, compared to $26.84 per share as of June 30, 2021, an increase of 1.1%
Total net realized and unrealized gain of $0.24 per share, compared to a total net realized and unrealized gain of $4.98 per share for the quarter ended June 30, 2021
Total purchases of $2.8 billion versus $1.8 billion of sales and repayments, including $364 million of sales to its joint venture Credit Opportunities Partners JV, LLC
Net debt to equity ratio(3) as of September 30, 2021 was 103%, compared to 90% as of June 30, 2021
Paid cash distributions to stockholders totaling $0.65 per share(4)

Declaration of Distribution for Fourth Quarter 2021

FSK's board of directors has declared a cash distribution for the fourth quarter of $0.62 per share, which will be paid on or about January 4, 2022 to stockholders of record as of the close of business on December 15, 2021.

Portfolio Highlights as of September 30, 2021

Total fair value of investments was $15.8 billion of which 73% was invested in senior secured securities.
Weighted average annual yield on accruing debt investments(5) was 9.1%, compared to 9.9% as of June 30, 2021. Excluding the impact of the merger accounting, weighted average annual yield on accruing debt investments was 8.1%, compared to 8.5% as of June 30, 2021.
Weighted average annual yield on all debt investments(5) was 8.5%, compared to 9.2% as of June 30, 2021. Excluding the impact of merger accounting, weighted average annual yield on all debt investments was 7.5%, compared to 7.7% as of June 30, 2021.
Exposure to the top ten largest portfolio companies by fair value was 20% as of September 30, 2021, compared to 20% as of June 30, 2021.

As of September 30, 2021, investments on non-accrual status represented 3.7% and 5.1% of the total investment portfolio at fair value and amortized cost, respectively, compared to 3.0% and 4.4% as of June 30, 2021.

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Live Long and Prosper....

[richardsok]

rm --   I surely dread the thought of persuading anyone.  I'm one of the duffers, groping in the dark and trying to read what few cards I can actually see.  I'm not the first to surmise Pimco might trim distributions when the PDI/PKO merger is effected -- but that's not a prediction..... it's just one added layer of uncertainty I don't have with PDO.

   I've seen the rumor some Pimco CEFs are sitting on large blocks of unrealized gains -- and I would REALLY like to know if rumors are true.  It seems a little dissonant when I see that some of those same CEFs had really TERRIBLE coverage three quarters ago and are only recently improving to decent coverage for the 3-mo and 6-mo periods.

   Then there's good ol' PTY.   I always liked PTY -- but even after its steep drop, there's still that deal-breaking 29% premium.

   PFN and PFL have come roaring back to fine coverage after struggling, and their charts show good support now after earlier fall-offs.  NAVs have been as solid as one could ask for.   Premia are acceptable .... barely.  Again, would like to know if big unrealized gains are sitting in their books.     Their managers are smart, but not immune to the stresses of low interest rates.

    Merrill Lynch CEF analysts are mum on these topics, far as I can see.    

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BTW on Oct 25 Wells Fargo tagged FSK "underweight".    Go figger.

[richardsok]

NB: From PFL Income statement on Futubull for FY2021. Diluted EPS: 2.21. I confirmed that exact EPS on Gurufocus. What is interesting is that PFL paid out 1.08 in distributions that same period.

What am I missing?

[richardsok]

Went through Pimco's July 31 CEFs Annual Report and came up with the following. I'm hoping someone will look this over because cash & gains left over for EOY special dists or distribution increases seem extraordinary. What am I missing? If PFL and PTY were doing so well in July, why did they cut distributions a couple of months later? The number seem clear, but something doesn't add up.
.

(TO CHECK, COPY AND PASTE THE URL AT THE BOTTOM OF THIS POST, THEN SCAN DOWN TO PAGE 22.)

-----------------

PTY
NII 1.32
Realized & Unreal Gains 1.78

Distributions
From NII 1.59
From ROC .14
------------------------------------------------

PCN
NII 1.24
Real & Unreal cap gains 1.77

Distributions
From NII 1.35
from ROC 0

----------------------------------------

PFL
NII .91
Realized & unreal cap gains 1.32

Distributions
From NII .84
From ROC .24



url.com/TyxTcz

[xray]

richardsok,
Your:
Went through Pimco's July 31 CEFs Annual Report and came up with the following. I'm hoping someone will look this over because cash & gains left over for EOY special dists or distribution increases seem extraordinary. What am I missing? If PFL and PTY were doing so well in July, why did they cut distributions a couple of months later? The number seem clear, but something doesn't add up.

----------

I believe you wanted my attention on this since it was posted under "CEF of the Month" [if true]. Don't want to interfere with your post to others [don't follow those particular CEF's [computer won't accept their data] but this is what I found when pushing the computer:

PCN 
Best of the three
Investor Momentum: +1.52
Chart data: Positive +00.28

PFL 
Worst of the three
Investor momentum: Negative
Chart data: Positive: Negative
Distribution: Currently unsustainable


PTY 
Neutral
Investor Momentum: +0.48
Chart data: Positive +00.21

Hope this helps a little....

Live Long and Prosper....

[richardsok]

X-
As always, I readily accept your software's analytics -- but in this case they don't address the net income + cap gain numbers minus the distributions in Pimco's annual report.   For once in my life I'm not talking technicals -- I'm into an earnings report .... and scratching my head.

I still believe I'm missing something vital but can't understand what. Is it not possible that the large undistributed that may be on their books could explain the enormous price premiums? OTOH, unless there's a big flaw somewhere, it defies belief that I'm the only one pointing these numbers out.

[xray]

richardsok,
Your:
I still believe I'm missing something vital but can't understand what. Is it not possible that the large undistributed that may be on their books could explain the enormous price premiums? OTOH, unless there's a big flaw somewhere, it defies belief that I'm the only one pointing these numbers out.

 Keep in mind:

1... Your looking back into your rear view mirror. Many managers and investors only look at the "current" news and evaluate how their holdings are directly affected at the end of the 4th Qtr. OIL is a great example of this [end of 4th Qtr planning] as overseas prices are being announced and will be increasing [coming to us] and we will be cutting oil back at home [pipeline in discussion of being shutdown] because of Climate Change. This also goes for the CEF's [the recent cuts you talked about] who see and recognize how their CEF's will be affected "going forward" and make the appropriate changes accordingly....
2... Large premiums normally mean "BIGGER LOSSES" if/when investor sentiment negativity changes ....
3... Big flaws cannot happen when big brother is watching and any CEF [or security] could be destroyed by any big flaw as a possibility ....
4... Sometimes a CEF's portfolio of holdings is reviewed and changes [within the portfolio] can't be disposed of easily "going forward" [like one's portfolio where everything is possibly overpriced] and now looking to the end of the 4th Qtr ....

Live Long and Prosper....

[Deleted]

richardsok ... maybe there is some helpful info for you in what I posted recently on 08Nov, a posting then smothered by large FSK press-release dumps (why is this happening? ... and FSK is a BDC, not a CEF, too) that you may have missed.

--- Frank

[richardsok]

Nov 11, 2021 3:07:45 GMT @fpajerski said:

richardsok ... maybe there is some helpful info for you in what I posted recently on 08Nov, a posting then smothered by large FSK press-release dumps (why is this happening? ... and FSK is a BDC, not a CEF, too) that you may have missed.

--- Frank

Thanks Frank.   I did miss yr earlier post.   I used to follow AlphaGen but my interests wandered elsewhere.  Interesting that he has positive comments on a couple of the same CEFs I'd been writing about.  I will take a closer look at some of his recent writing and might even put in a truncated version of my post here down in the comments section of one of his articles.    See if he has a comment.

Good luck out there.
    

[xray]

FSK
Insider Buying

11/10 Insider bought 1000sh @ 21.81....

Comment: FSK was trading @ 21.80 today [own from 21.96 COB last Friday]. Remains a 10star performer, with a current 100 report card [100 Power rating] with a analysis performance of +379 [needs >+298]....

Live Long and Prosper....